Not following proper lien investigation procedures for the investigation and negotiation of Medicare liens can have far-reaching consequences on settling parties. Lien investigation means finding the dollar amount of conditional payments made by Medicare that are related to an injury for which another entity has the primary responsibility to pay under the Medicare Secondary Payer Act (MSP). For a plaintiff and their attorney or even a defendant paying a third party settlement, there could be MSP conditional payment exposure with potential recovery actions from the U.S. government. In many areas of law, a party seeking to enforce a lien needs to first file a document in court, providing notice to the party against whom it seeks to enforce the lien. The U.S.’s direct statutory right to reimbursement of its conditional payments pursuant to the MSP does not require the filing of a document in court prior to becoming enforceable but does have a 60-day notice period from The Centers for Medicare & Medicaid Services (CMS), the agency that runs Medicare, after which interest begins accruing for parties that fail to pay CMS contractor final demands. While the procedures establishing Medicare’s conditional payment reimbursement rights differ from other lien procedures, this direct reimbursement right of the U.S. under the MSP is often referred to as a lien right.
The Plaintiff in Mayo v. NYU Langone Medical Center, a New York state trial court case, seems to have gotten a second chance at settlement when the court vacated a Settlement Agreement in the amount of $725,000 when Plaintiff’s counsel received a letter soon after settlement requesting a much higher Medicare reimbursement than was originally discovered. While the court’s decision worked in favor of the Plaintiff this time, (giving the Plaintiff and attorney a second crack at a higher settlement or trial), if the motion was denied, the attorney might have been accused of committing legal malpractice.
In Mayo, the Plaintiff and Defendant each received different conditional payment letters from the Centers for Medicare & Medicaid Services (CMS). While not ideal, this can occur when duplicate files are generated from the two different contractors that CMS uses for collecting conditional payment reimbursements, often referred to as Medicare liens, stemming from liability/auto/self-insured, workers’ compensation and/or no-fault cases. The Plaintiff’s letter from the Benefits Coordination and Recovery Center (BCRC) indicated that Medicare’s conditional payment amount was $1,811.95. The Defendant’s letter from the Commercial Recovery Center (CRC) indicated that Medicare’s then existing lien amount for conditional payments was $2,824.50. Before requesting or obtaining a Final Demand from the CMS web portal, the parties created a written Settlement Agreement, agreeing to settle the matter in its entirety for $725,000 inclusive of what the parties contemplated as a “Medicare-final” conditional payment reimbursement of no more than $2,824.50. The Defendant never signed the Settlement Agreement. Prior to settlement funds being disbursed, a Final Demand from CMS was received by the Plaintiff, the Executor of an Estate of a Medicare beneficiary, asking for repayment of the shocking amount of $145,764.08.
The Plaintiff attempted to appeal the Final Demand amount at the first few administrative stages but was not able to be heard by a U.S. District Court because he failed to exhaust his administrative remedies. Instead of completing all four administrative appeals before seeking federal court review, the Plaintiff went to state court and asked the court to void the Settlement Agreement. The Plaintiff argued that despite being in writing, the Settlement Agreement was unenforceable because it had not been signed by a representative for the Defendant and that there was a mutual mistake of fact concerning the Medicare lien amount. The court agreed with both arguments.
The CMS web portal, called the Medicare Secondary Payer Recovery Portal or MSPRP, was improved in July of 2018, to make it even easier for settling parties to obtain up to date conditional payment/lien reimbursement amounts. Congress, through the SMART Act amendments to the MSP, regulated by 42 C.F.R. § 411.39 of the Code of Federal Regulations, contemplated parties being able to rely on a download of a time and date stamped Final Conditional Payment Letter from the Medicare Secondary Payer Recovery Portal (MSPRP) provided there was proper notification/reporting of a pending settlement within 120 days prior to the anticipated settlement and after giving CMS at least 65 days to search for conditional payments to be reimbursed. The updated functionality of the web portal provides a tool allowing authorized users to view conditional payment correspondence and request electronic or paper copies of same.
On November 19, 2018, CMS announced a webinar on upcoming self-reporting functionality that will be added to the MSPRP in January 2019. Medivest will monitor this MSPRP enhancement and has representatives that regularly communicate with CMS via phone, fax, mail and the CMS MSPRP web portal to help parties stay up to date with CMS and avoid misunderstandings like the one that occurred in the Mayo case.
• It is crucial for prospective settling parties to investigate conditional payment reimbursement amounts or work with an entity familiar with lien investigation procedures.
• There is value in evaluating Conditional Payment Summary forms that accompany the conditional payment correspondence from Medicare to confirm all entries on the form are injury-related and/or determine whether some entries should be disputed.
• In addition to checking and verifying the correct demand amounts from CMS contractors, prior to settlement, steps should be taken by all parties to expand lien search inquiries beyond traditional Medicare (and Medicaid) to determine whether a Medicare Advantage Plan or Organization (MAP/MAO) made any conditional payments that could be recovered under the MSP.
• If a Claimant/Applicant is a Medicare Advantage Plan member and any payments by the Medicare Advantage Plan should have been paid by a primary payer, steps should be taken to get those conditional payments reimbursed promptly.
• During the lien investigation process, parties should analyze whether a compromise (reduction) of a lien or potentially a waiver may be appropriate.
• Medivest provides lien resolution services to help parties satisfactorily negotiate outstanding public and private health care matters including Medicare liens, Medicaid liens, Veterans Administration/TriCare liens, hospital liens, and doctors’ bills. Our lien resolution team works hard to dispute non-claim related bills, resolve and reduce outstanding bills/liens, and will seek refunds for amounts already paid when appropriate. Please reach out to discuss lien resolution today.
 42 U.S.C. § 1395y(b)(2) et. seq.
 The MSP also provides the U.S. subrogation rights, subrogating the U.S. to the rights of any Medicare beneficiary as follows:
(iv) Subrogation rights
The United States shall be subrogated (to the extent of payment made under this subchapter for such an item or service) to any right under this subsection of an individual or any other entity to payment with respect to such item or service under a primary plan.
42 U.S.C.A. § 1395y (West)
 The MSP law says,
(III) Use of timely web download as basis for final conditional amount
If an individual (or other claimant or applicable plan with the consent of the individual) obtains a statement of reimbursement amount from the website during the protected period as defined in subclause (V) and the related settlement, judgment, award or other payment is made during such period, then the last statement of reimbursement amount that is downloaded during such period and within 3 business days before the date of the settlement, judgment, award, or other payment shall constitute the final conditional amount subject to recovery under clause (ii) related to such settlement, judgment, award, or other payment.
42 U.S.C. § 1395y(b)(2)(B)(vii)(III).
The protected period defined in subclause (V) is a 65-day period that can sometimes be extended another 30 days after a party, their attorney or other representative (such as a MSP Compliance company) has notified CMS through the MSP recovery web portal of a pending liability insurance (including self-insurance), no-fault insurance, or workers’ compensation settlement, judgment, award or other payment (“Settlement”). The entire process is outlined in the Code of Federal Regulations (C.F.R.) at 42 C.F.R. § 411.39. If after the 65 day Protected Period, the date/time stamped Final Conditional Payment Letter is downloaded within three days of a settlement, parties may reasonably rely on that Final Conditional Payment Letter. There seems to be some uncertainty whether the MSPRP Final Conditional Payment Letter may be re-requested at a later date if the settlement occurs later.
 There should be primary diagnosis codes obtained from the insurance carrier’s/Responsible Reporting Entity’s report of the claim under Section 111 of the Medicare Secondary Payer Act (MSP). It is important to parse out payments for co-morbid and other non-injury related payments made by Medicare that don’t count as conditional payments because disputes may only be made once during this process. Once disputed, unless CMS responds within 11 days from receipt, the dispute will be considered granted.